## Facts

- Commercial landlords Mervin and Ethna Reid leased office space to Mutual of Omaha Insurance Company and United Benefit Life Insurance Company for five years at $1,100 per month, beginning in 1980.
- The landlords later leased adjacent space to Intermountain Marketing, whose employees allegedly created excessive noise, took Mutual’s parking spaces, and interfered with Mutual’s business operations.
- Mutual repeatedly complained and, in February 1982, gave notice and vacated before the lease term expired, stopping rent payments.
- The landlords sued for breach of the lease and sought rent for the remainder of the term; Mutual counterclaimed for constructive eviction based on the landlords’ alleged failure to control Intermountain.
- During litigation, the landlords remodeled and relet the premises to Intermountain for the balance of the original term at a comparable rent; Intermountain later vacated and filed bankruptcy, and the premises remained vacant.
- After a bench trial, the trial court rejected constructive eviction and awarded damages equal to remaining rent minus rent received from Intermountain.
- Mutual appealed, challenging the constructive-eviction finding and the damages calculation, including the landlords’ mitigation obligations.

## Issues

1. Whether Mutual proved constructive eviction based on interference by another tenant that the landlords allegedly failed to control.
2. Whether the damages award improperly assumed future rent losses without adequately accounting for the landlords’ continuing duty to mitigate after trial.

## Decision

- The Utah Supreme Court affirmed the finding that Mutual was not constructively evicted and therefore breached the lease by vacating early.
- The court reversed in part and remanded on damages, holding that the landlords had an ongoing duty to mitigate and that a lump-sum award of future rent that failed to reflect post-trial mitigation was improper.
- The court indicated damages should be structured to avoid speculation about future mitigation, with the trial court retaining jurisdiction to address additional post-trial rent losses as they accrue, conditioned on proof of continued reasonable mitigation.

## Legal Principles

- Constructive eviction requires substantial interference with the tenant’s use and enjoyment sufficient to justify vacating; appellate review defers to supported trial-court findings on the severity of interference.
- In commercial leases, when a tenant abandons the premises and stops paying rent, the landlord must take reasonable steps to relet to mitigate damages rather than leaving the property idle and claiming full rent.
- Damages for unpaid rent should reflect actual mitigation efforts; courts should avoid speculative, forward-looking lump-sum awards for future rent that ignore the landlord’s continuing mitigation duty.
- A court may retain jurisdiction or use supplemental proceedings to award post-trial rent losses as they accrue, subject to proof that reasonable mitigation efforts continued.

## Conclusion

The court held that Mutual was not constructively evicted, but it limited the landlords’ recovery by requiring reasonable mitigation in reletting and by rejecting a speculative award of future rent that did not account for post-trial mitigation efforts.


Reid v. Mutual of Omaha Ins. Co., 776 P.2d 896 (Utah 1989)